Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.

Archive for April 6th, 2011

It was truly a pathetic show. While Venezuela’s has product shortages, the electric network is suffering from years of lack of investment, most state industries don’t function, let alone pay their own way, there was Hugo Chavez giving away all of 667 cars built by Venezuela’s joint venture with Iran, called Venirauto. And then the bombastic promise (Why i it always “we will”, never )we have”) “we will build 16,000 of these cars in 2011″

So?

Over half a million cars were sold in Venezuela in 2007 and since the Venirauto cars are just modified Peugeots which have been built in Iran for years, all Chavez has accomplished is to import parts from Iran to be assembled here, not much different than what has been done for years. Except, of course, Venirauto has a green light to bring parts, while all other struggle to get a myriad approvals from the Government.

But let’s calculate it. GDP is one trilion Boliavrs at Bs. 4.3 per US$, it is around US$ 232 billion. Chavez kidnappped the country’s airwaves, forcing Ministers to be there, to give away 667 of these cars. There are two models of these cars, one sell for the not so socialist price of US$ 26,200 and the “cheap” model for $17,400 at the official rate of exchange. (We are talking 5.5 and 53.7 times the annual minimum salary, even if Chavez said lower prices)

If we assume that half the cars are of each model, then the cars “given out” by Hugo today, were worth 14.5 million dollars or 6.2 10-5 Venezuela’s GDP. (How much was the Nationwide broadcast worth in itself? How much advertising was lost?)

So, really, what’s the bid deal? If instead of building cars to compete with the private sector, Chavez was letting his Ministers work on solving health, electricity, transportation or water problems, the “people” who can not afford one of these cars would be much better off than they are.

But that is what makes today Chavez show so pathetic: There is no sense of orders of magnitude, no sense of the ridiculous. Chavez boasts about giving away 667 Veinrauto cars (You have to wonder if they added one at the last minute) while he is being lied about their price, which is likely to be subsidized anyway.

Just more fuel to the official BS, at a very high cost. I mean, has anyone seen a Venirauto Distributor, or is Chavez the only one?

Because Venirauto was started five years ago and as far as we know, it has yet to produce more than 4,000 cars.

It’s just not worth it.

Simply put, the military must not teach orders of magnitude in their courses, because clearly, Hugo has no clue at what size is relevant or important.

But of course, he squeezes the topic as much as he can, the picture above is today’s, but the ones below are testimony to how much hot air and time Hugo has devoted to such an irrelevant topic:

Note added: It turns out that in 2009, then Minister of Science and Technology, today Government pollster Jesse Chacon said Venirauto would make 16,000 cars in 2010, the same number Chavez is projecting for this year. More interesting, Venirauto lost money in 2010, giving up Chavez’ claim that the company makes money.